usda update dec 2016

USDA Update – Soybean and Cotton

Wednesday, December 14, 2016

www.angelcommodities.com

USDA December 2016 forecast further increases global

production for Soybean and Cotton

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Prepared and Compiled by Ritesh Kumar Sahu Analyst - Agri Commodities [email protected] (022) 2921 2000 Extn. 6165

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Soybean

World Production estimates rise again

Global soybean production is forecast higher this month by

United States Department of Agriculture (USDA), primarily

on larger soybean crops in India and Canada. USDA

forecasts soybean production at 338 million tonnes (mt),

up by 0.57% in December compared to 336.1 mt in

November and 324.2 mt in May.

USDA raised world production for the new crop by 1.92 mt

in its December report due to increase production forecast

in India by 1.8 mt or 19% to 11.5 mt due to higher yield

estimates of 1.01 tons per hectare up 15 per cent from last

month and 2 per cent above the 5-year average

The production forecast is unchanged this month for other

top soybean produce countries like the US, Brazil,

Argentina, and China.

269

282

320 313

336 338

260 270 280 290 300 310 320 330 340 350

2016/17 2016/17

2012/13 2013/14 2014/15 2015/16 Nov Dec

Tho

usa

nd

s

World Production of Soybean (Million Tonnes)

Source: USDA

119 102

57

13 12 9 6 21

0 20 40 60 80

100 120 140

US

Bra

zil

Arg

enti

na

Ch

ina

Ind

ia

Par

agu

ay

Can

ada

Oth

er

Tho

usa

nd

s

Top Soybean producing Countries (mt)

Source: USDA

World ending stocks at record levels

World ending stocks for soybean increase by 1.62% or

1.32 mt to 82.85 mt in December for 2016/17 season

versus 81.51 mt estimated in November. This upward

revision is due to increase in stocks in India to 1.31 mt, up

by 187.5 per cent m/m and 211 per cent y/y.

It is the sixth consecutive yearly increase in world ending

stocks starting 2011/12. According to the latest USDA

report, Argentina and Brazil will be holding close to 70% of

soybean at the end of 2016/17 season. A bigger soybean

carryover stocks is seen for Argentina because of lower

exports in 2015/16 (down 670,000 tonnes to 9.25 mt) and

increase in production (up 200,000 tonnes to 57 mt).

In y/y basis, the US soybean ending stocks increase by 211

per cent or 7.7 mt to 13.1 mt, US will hold about 16%

stocks in 2016/17.

World trade to Increase slightly

World exports of soybeans, is expected to grow 5.53% in

2016/17 to 139.3 mt, up 0.07 per cent compared to last

month figures. This month the exports revised higher for

Canada to 4.4 mt from 4 mt in November estimates.

Brazil, United States and Argentina are the top soybean

exporting countries in 2016/17 but the soybean exports

are down 250,000 tons to 9.0 mt on slowing demand.

On the import front, China, European Union (EU) and

Mexico are the top three soybean importing countries in

the world. The soybean imports from EU raised by 6.15 %

this month due to brighter outlook for EU soybean crush.

55

62

79 77 82 83

50

60

70

80

90

2016/17 2016/17

2012/13 2013/14 2014/15 2015/16 Nov Dec

Tho

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nd

s

World Ending Stocks (mt)

Source: USDA




This month, USDA has increase the soybean crush for

India due to abundant harvest this season. The soybean

crush figures increased by 11.84% to 8.5 mt in December

report compared to last month estimates of 7.6 mt.

Due to higher crushing, the soy meal production in

2016/17 will increased to 6.8 mt from 6.1 mt estimated

last month. Similarly the exports for 2016/17 season is

also forecasted to increase this month by 50% to 1.8mt

compared to last month’s forecast of 900,000 tons and

the 2015/16 total was 396,000 tons.

Higher crushing of soybean has affected on the soybean

oil imports forecast in the country. This month the

imports have been revised down to 3.8 mt from 4 mt last

month. Thus in 2016/17 the imports will be lower by

12.8% compared to last year imports. Last year, India

imported about 43.6 lt.

India Balance Sheet

100

82

67

56

76

85

50

60

70

80

90

100

110

2016/17 2016/17

2012/13 2013/14 2014/15 2015/16 Nov Dec

Hu

nd

red

s

Domestic Soybean Crush (Lakh Tonnes)

Source: USDA

1000 2015/16

Oct Nov M/M Y/Y

Beginning Stock 7.77 4.21 4.21 0.00 -45.82

Production 71.25 97.00 115.00 18.56 61.40

Imports

Total Supplies 79.02 101.21 119.21 17.78 50.86

Crush 56.00 76.00 85.00 51.79 51.79

Exports

Total Demand 56.00 76.00 85.00 11.84 51.79

Ending Stocks 4.21 4.56 13.11 187.50 211.40

Source: USDA

India Soybean Balance Sheet (Lakh tonnes)

2016/17 %Chg

Favorable processing margins are seen raising EU soybean

imports in 2016/17 by 800,000 tons from last month’s

forecast to 13.8 mt. An EU supply deficit of vegetable oil,

due to this year’s decline in rapeseed production, is

encouraging more soybean imports.

Soybean import from China was unchanged this month at

86 mt in 2016/17. However, China will import 3.3% or 2.8

mt more than the previous year. Moreover, Mexico,

Taiwan, Indonesia and Iran also increase their soybean

imports this year due to good crushing demand.

World Balance Sheet

Domestic production

India soybean production for 2016/17 at 11.5 mt, up 19

per cent from last month’s estimate, up 61% from last

year production of 71 mt . The increase in production is

due to better than expected harvest as yield is estimated

at 1.01 tonnes /hectares which is higher by 15 per cent

from last month estimates and 2 per cent above 5-year

average.

1000 2015/16

Nov Dec M/M Y/Y

Beginning Stock 78.61 77.22 77.07 -0.20 -1.96

Production 313.31 336.09 338.00 0.57 7.88

Imports 132.99 136.21 136.96 0.55 2.99

Total Supplies 524.92 549.52 552.04 0.46 5.17

Domestic Use 276.41 288.17 289.44 4.72 4.72

Exports 132.14 139.16 139.25 5.38 5.38

Total Demand 408.55 427.33 428.69 0.32 4.93

Ending Stocks 77.22 77.36 81.53 5.39 5.57

Source: USDA

Soybean World Balance Sheet (million tonnes)

2016/17 %Chg

122

95 87

71

97

115

60 70 80 90

100 110 120 130

2016/17 2016/17

2012/13 2013/14 2014/15 2015/16 Nov Dec

Hu

nd

red

s

Domestic Production of Soybean (Lakh Tonnes)

Source: USDA




Cotton

World cotton production to rebound

In December monthly report, USDA increases the projections

for world cotton production by about 1% to 22.7 million

tonnes (104.24 million bales). Similarly, the ending stock also

forecasted higher. The global trade is also increased while

consumption figures were little down in the December report.

In the December report, the production for the US and

Australia was revised higher by 2.24% to 3.6 mt (16.5 million

bales) and 12.51% to 0.98 mt (4.5 million bales) respectively.

In 2016/17, cotton production in the top two producers—India

and China—is expected to move in opposite directions. The

production in India expected to increase 2.3% while output in

China is poised to decrease by 4.6%, they accounts for a

combined 46% of the global cotton crop this season.

26.98 26.21 25.95

21.00

22.49 22.70

20 21 22 23 24 25 26 27 28

2016/17 2016/17

2012/13 2013/14 2014/15 2015/16 Nov Dec

Tho

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World Cotton Production (mt)

Source: USDA

5.88

4.57

3.60

1.80 1.42

0.98 0.81

3.65

0

1

2

3

4

5

6

7

Ind

ia

Ch

ina

Un

ited

St

ates

Pak

ista

n

Bra

zil

Au

stra

lia

Uzb

ekis

tan

Oth

er

Tho

usa

nd

s

Top Cotton Producing Countries (mt)

Source: USDA

Pakistan’s crop is projected at nearly 1.8 mt (8.3 million

bales) in 2016/17, about 18% higher from a 2015/16.

Cotton production in Brazil and Australia are also

expected to see increases in 2016/17. For Brazil, the

production is forecasted to increase by 10% due to higher

yield while the production in Australia is forecasted to

increase by 73%.

World Consumption forecast drops further

In the December report, USDA decreases the consumption

figure by 0.07% in 2016/17. This drop is due to

competition from the synthetics fiber and drop in mill use

in India and the US.

Reduced yarn imports by China are expected to result in

lower cotton mill use in two countries - India and

Pakistan. Cotton consumption for these countries is

forecast to decrease 2% and 1%, respectively, in 2016/17.

However, world consumption will increase by 0.58% to

24.4 mt on year due to higher mill use in China, Vietnam

and Bangladesh. China remains the leading consumer of

cotton, projected at 7.78 mt (35.75 million bales) in

2016/17, up by 2.15% compared to previous year and the

highest since 2012/13.

In Vietnam and Bangladesh, cotton mill use in 2016/17 is

forecast to increase 11% and 5%, respectively, and

account for a combined 10% of global consumption in

2016/17.

23.61

23.90

24.26 24.23

24.38 24.37

23.5

23.7

23.9

24.1

24.3

24.5

2016/17 2016/17

2012/13 2013/14 2014/15 2015/16 Nov Dec

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s

World Cotton Consumption (mt)

Source: USDA Source: USDA




World Trade stable

In the latest USDA, global cotton trade is forecast similar

to the previous two seasons. World cotton trade is

projected at 7.7 mt (35.3 million bales) in 2016/17,

marginally above 2015/16 and equal to 2014/15.

However, global cotton trade remains well below

2012/13’s record of 10.4 mt (46.4 million bales).

In December report, the exports for the US and Australia

revised higher while exports revised down for Uzbekistan,

Burkina and Maliis.

In 2016/17, larger and higher quality crops in the United

States and Australia are expected to increase compared to

previous year. However, cotton shipments from India,

Brazil, and Uzbekistan are expected to decline due to

lower supplies available for export.

World Ending Stocks improve in December but decline

y/y

In the December report the world ending stocks have

improved due to increase stocks predicted in India, the

US, Australia and Bangladesh.

The stock position in the US will increase 6.63% to 1 mt in

December forecast while stocks in India are forecasted to

increase by 2.19% to 2.6 mt. The stocks in Australia are

expected to increase by 29% on y/y while 17% increase in

stocks is expected from the November forecast.

However, world cotton stocks are forecast to decline 8 %

(1.6 mt or 7.7 million bales) in 2016/17 to 19.4 mt (89.1

0

500

1,000

1,500

2,000

2,500

3,000

Un

ited

Sta

tes

Ind

ia

Au

stra

lia

Bra

zil

Uzb

ekis

tan

Bu

rkin

a

Mal

i Cotton Exports 2016/17 Vs 2015/16 ('000 tonnes)

2015/16 2016/17

Source: USDA

million bales), compared to last year stock positions which

is the lowest in 5 years.

World Balance Sheet

Domestic production unchanged in December

USDA estimates India cotton production at 346 lakh bales (1

bale =170 kg) or 27 million bales or 5.88 mt in 2016/17,

unchanged from last month but higher by 2% from last

year.

The area was down 2% from last month and down nearly

12% from 2015/16 due to a decline in acreage in northern

India. Despite the lower acreage the production forecast is

higher due to higher yield. In 2016/17, yield is estimated at

560 kilograms per hectare, up 6% from the 5-year average

due to normal monsoon and improved pest and disease

management in top cotton growing states of Maharashtra

and Gujarat. Cotton harvesting is complete in the northern

20.06

22.49

24.31

21.08

19.23 19.41

19

20

21

22

23

24

25

2016/17 2016/17

2012/13 2013/14 2014/15 2015/16 Nov Dec

Tho

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World Cotton Ending Stocks (mt)

Source: USDA

2015/16

Nov Dec M/M Y/Y

Beginning Stock 24.31 21.08 21.08 0.00 -13.31

Production 21.00 22.49 22.70 0.93 8.07

Imports 7.67 7.67 7.69 0.27 0.23

Total Supplies 52.98 51.23 51.46 0.45 -2.88

Domestic Use 24.23 24.38 24.37 -0.07 0.58

Exports 1.80 7.67 7.69 0.34 327.99

Total Demand 26.02 32.05 32.06 0.03 23.19

Ending Stocks 21.08 19.23 19.41 0.96 -7.90

Source: USDA

Cotton World Balance Sheet (Million tonnes)

2016/17 %Chg




cotton areas of Punjab, Haryana, and Rajasthan but still going

on in Gujarat and Maharashtra.

In the December forecast, the domestic use has been lower

compared to last month’s predictions due to anticipation of

reduced cotton yarn import by China which results in the

increase in ending stock by 2.2% m/m and 7.76% y/y.

India Balance Sheet

6,205

6,750

6,423

5,748 5,879 5,879

5,100

5,400

5,700

6,000

6,300

6,600

6,900

2016/17 2016/17

2012/13 2013/14 2014/15 2015/16 Nov Dec

India Cotton Production ('000 tonnes)

Source: USDA

2015/16

Nov Dec M/M Y/Y

Beginning Stock 17.27 14.02 14.02 0.00 -18.84

Production 33.81 34.58 34.58 0.00 2.28

Imports 1.37 2.31 2.31 0.00 68.24

Total Supplies 52.45 50.91 50.91 0.00 -1.07

Domestic Use 31.06 30.74 30.42 -1.03 -2.06

Exports 7.38 5.38 5.38 0.00 -27.17

Total Demand 38.44 36.11 35.79 -0.88 -6.89

Ending Stocks 14.02 14.78 15.11 2.19 7.76

Source: USDA

India Cotton Balance Sheet (Million Bales (170 kg))

2016/17 %Chg

usda update dec 2016

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